Netflix outsources their IT, what is your excuse?

Netflix has changed the way we consume video content, and grown into a streaming giant.  A key to their success was knowing what parts of the business to outsource, and which ones to keep in house.  Starting in 2008 they shifted their infrastructure over to a partner, and unplugged their last corporate datacenter in 2016.  The biggest benefit is their increased agility due to having the “operational load” of running ALL their technology shifted to an outside partner.

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Here are three points to consider when thinking about outsourcing your technology to a partner as highlighted by Netflix!

Agility is increased

One of the primary benefits of outsourcing to a partner is increased agility.  Agility is the ability to change direction quickly and with minimal effort.  Lots of businesses *want* to be agile, but their decisions don’t support this.  Examples of this are large capital expenses that are not tied to business utilization directly.  Once you have established an internal IT group it is difficult to be truly agile if part of the decision is based on the sunk costs of training, equipment, and people.

Focus on efforts that will increase business value

A business needs to focus on increasing their competitive advantage in the marketplace.  Time spend on non-value add activities are a drain on business profits and productivity.  Often it seems more expensive to outsource a business function until you add in the lost productivity of handling it in-house.  The most basic illustration of this is handling help desk calls internally.  Instead of ONE employee being involved you know have TWO, which doubles your cost of handling the issue!

Share in a partner ecosystem that benefits both parties

The economies of scale in a partnership are huge.  Each party learns from the other and over time productivity is increased with LESS effort.  Anything learned by your partner will be “shared” with you via the improvement of their services and strategy to you.  What the partner learned by working directly with you will also increase your productivity and shape the relationship over time.